Emerging tech starts with the cloud
What do dynamic pricing, digital transformation, airline retailing at scale, and omnichannel distribution have in common? They are most often happening in the cloud!
In this session, David and John explored why a growing number of travel companies see the cloud as a way to accelerate innovation, lower costs, and meet the changing demands of travelers. According to David, the pandemic and subsequent recovery were something of a wake-up call for travel.
“The breadth, the scale, and duration brought about by the pandemic certainly led to a sustained shift in the way I think travel and hospitality companies plan, manage, and operate their businesses.”
—David Peller, Amazon Web Services
Cloud technologies—in contrast to traditional on-premises IT operations—offer multiple advantages. IT leaders have newfound levels of agility and can deploy new solutions worldwide in a matter of minutes. Innovation and experimentation can thus happen faster and more efficiently. The cloud’s elasticity makes it possible to scale capacity up and down as needed, enabling companies to trade capital expense for a variable “pay-as-you-go” model.
Skift’s 2021 Digital Transformation report, published recently in partnership with Amazon Web Services, showed that over half of 1000 technology leaders surveyed are already running their business in the cloud or are in the mid-tolate stages of migrating to it. David credits the shift in large part to a significant rise in executive support.
“Speed became so critical through COVID, so I certainly think that that has given the industry the momentum to really prioritize these topics.”
—David Peller, Amazon Web Services
ATPCO is among the travel technology organizations seeing great value in the cloud.
“All of ATPCO’s development has been 100 percent cloud development starting a few years ago, and so we were in a really good spot when the when the pandemic hit.”
—John Murphy, ATPCO
Hello, everyone. I’m John Murphy, chief information officer at ATPCO. Welcome to everyone joining us for Elevate. This session will focus on one of my favorite topics, emerging technologies in the cloud and digital transformation, and how it's changing our industry.
I’m very excited to welcome Mr. David Peller of Amazon Web Services. AWS is the world's largest cloud provider and David leads the AWS travel and hospitality practice, which is focused on supporting customers as they accelerate cloud adoption and digital transformation. David and his team work with a number of travel industry brands that we all know of, including Airbnb, Avis Budget Group, Wyndham Hotels, United Airlines, and Star Alliance, just to name a few. Welcome, David.
Thanks, John. Great to be here.
David, the current business environment provides a tremendous opportunity for the travel industry to modernize, to transform, particularly using technology in the cloud. We see new announcements from different players almost every day. How do you see the state of cloud adoption, and associated with that, digital transformation in the industry in general?
So, John, by current business environment I think you're referring to the ongoing impact of the pandemic, and you know disruption of course isn't new to travel and hospitality companies, but the breadth, the scale, and duration brought about by the pandemic certainly led to a sustained shift in the way I think travel and hospitality companies are both planning and managing and operating their businesses.
So gone are the traditional and consistent patterns of demand and predictable supply. Change has come to the established go-to-market channels for distribution and sales. So, where we are now of course, seeing demand pick up, that's great. But when demand fell, and it remains challenging in many parts of the world where travel restrictions remain, travel brands had really little choice but to captivate customers with dreams of what was ahead and to establish new ways of engaging customers.
So these brands that have enhanced their digital channels invested in new and improved websites, mobile applications, digital services, experiences, delivering improved automation, efficiency, customer self-service. And as travel reopens and with the ever-evolving customer expectations, I think brands that took this period and invested in digital are going to be really well prepared to better serve their passengers and guests and meet the evolving needs around contactless self-service and more.
And from our perspective at Amazon Web Services, the world's most comprehensive and broadly adopted cloud platform, we support travel and hospitality businesses of every size and segment around the world, and their leaders, to transform becoming more agile and resilient. And we've observed firsthand how much innovation has been stimulated from this period of disruption and of course how much this has been delivered using the cloud.
And so AWS in partnership with Skift, the global travel media company, we've just released our second annual digital transformation report, having interviewed about a thousand travel and hospitality leaders over the past few months.
And if we bring up that first slide here, you can see that just over half the survey’s participants stated that they either ran their entire business in the cloud or are in the mid or late stages of migrating to it, which I think is pretty compelling.
David, is this where you expected the travel industry to be at this point or is there is there a surprise lurking there?
You know, John, I think there are so many leaders in the travel industry which has often been miscategorized as being burdened by legacy technology. Companies like Cathay Pacific, Emirates, Finnair, Singapore Airlines, Qantas, United Airlines, you know, together with their low-cost airlines, cousins if you will, like Ryanair and Southwest, who have for years been building on the cloud and transforming, and the businesses using cloud technology.
Looking beyond that, if you consider Expedia Group, Korean Air, Plaza Premium Group, Ryanair, and Star Alliance, they've migrated entirely to the cloud and are all in on AWS. Then there's companies like Travelport, which you know is at the heart of modern travel retailing, airport technology providers like Elenium Automation, and industry technology leaders like IBS software that provide mission-critical systems for travel, all of which have been built on AWS cloud.
But, John, you know we're talking here about the state of cloud adoption across the industry and I think it's fair to say that you and the ATPCO team have also been a little bit busy lately. So maybe you'd like to share a little bit about where you are on, ATPCO is on its cloud journey.
We have been busy for the last few years. We've embraced cloud whole hog, if you will. We've been busy eliminating all of the resources in our data center as we migrate to AWS. We've built an AWS data lake and we've embraced software as a service from the cloud perspective for our employees as part of the employee experience.
And all of our development has been 100 percent cloud development starting a few years ago. We no longer did any new development other than in the AWS environment, and I think that because we started that actually before the pandemic, we were in a really good spot when the when the pandemic hit, especially on the employee experience side. Because we had embraced the cloud we were set up perfectly to go right into remote work with really no interruption at all.
So we embraced it from the employee perspective, from the customer perspective, and just how we do business. It was a very smooth transition for us.
But that that kind of leads me to my next question. Has Covid really affected the adoption of cloud? Has it accelerated it from your perspective, or has it delayed it?
Yeah, I think actually perhaps the greatest impact of all has been the level of executive commitment to digital transformation and the pace of innovation that naturally follows from this level of executive attention. This period of disruption showed all of us how essential reinvention is for travel and hospitality companies.
It was actually talking at the end of last year at the AWS Re-invent conference, Andy Jassy, who's now the CEO of Amazon, spoke of eight keys to reinvention. I’m not going to take you through all eight but I will highlight two specifically.
Firstly, this idea of leadership's will to invent and reinvent, and secondly, speed. And I think travel and hospitality companies have really embraced digital transformation throughout this period, both for survival on the one hand and also reinvention on the other, and I do think that technology is born of these times. We're actually going to stick around and improve the way that we fly, eat, stay, and experience the world moving forward.
And so whether it's contactless service, such as IHG's studio service that enables guests to manage their in-room experiences through their own mobile device, or seamless check-in deployed by Wyndham Hotels and resorts on their mobile app, whether it's the use of machine learning and artificial intelligence by Star Alliance with their transfer decision tool and passenger-facing connection service to provide a more efficient and personalized traveler experiences, and even the use of cloud to transform guest contact centers with Amazon Connect delivering delightful customer experiences and optimized operations for companies such as Priceline, who are now better able to handle unpredictable spikes in volumes while continuing to innovate faster.
And so, John, if we dive back into the Skift Digital Transformation Report, which has just been published, I think we can show another slide here too.
You'll see that about 91 of survey respondents said that digital transformation was a very or somewhat important priority for their business, and I mentioned that this is the second year we've been running the report. So last year, the previous year, the number was 78. So we've, I think that really tells you just how much focus there is today on this topic and how pertinent it is to the industry right now.
And if we go to just one more slide, you can see from this that 87 of respondents believed it to be more important to proceed with their digital transformation plans given the pandemic. And on the right hand side of the chart you see that interestingly, 85 percent agreed that innovation born of these times will stick around and will improve the way that the travel industry does business moving forward, which again I think is a really compelling insight.
Do you feel like that Covid backed the industry into a corner and it had to re-evaluate, or it just accelerated the plans that many already had?
Look, I think, it comes back to what I was suggesting about the executive attention. Speed became so critical through Covid so I certainly think that that has really given the industry the momentum to really prioritize these topics. Yeah, let's shift a little bit from Covid to data. What do you see as state of the art in terms of what the cloud is able to deliver now, in terms of data, and what do you see is the role of cloud as we look at data? Being a data company, ATPCO, and being a data-centric industry to a big degree.
So, John, there's more data created in one hour today than in one year 20 years ago. I think more data is going to be created in the next three years than in the past 30 years, so data's obviously at the center of our industry, for sure. For too long, however, data's been siloed. I think there's a there's a bunch of data on the supply side of travel, then there's another volume of data on the demand side, and you've got data from travelers and guests, from web and mobile searches. You've got direct bookings, indirect bookings, online and offline agencies, metasearch providers and other intermediaries. Then there's loyalty programs, service providers. There's a ton of data across the industry.
And if you reflect on the disruption our industry's faced for the past 18 months, even if all that data was connected right now, today, it's not likely to going to be the best predictor of future demand given how travel patterns have changed. You and I certainly aren't traveling for business like we used to, and how those patterns are going to continue to evolve, which I think leads to cloud. Travel companies really need to be able to ingest, store, process, and analyze ever more volumes of data in real time to make it actionable and useful.
Travelers expect more personalized offerings, communication from their preferred brands, richer and deeper experiences than ever before. And certainly at AWS we're seeing travel companies leverage the agility, the elasticity, and cost advantages of processing data on the cloud like never before.
Building data lakes on AWS to break down traditional data silos, using machine learning to drive insights and curate unique offerings like never before. And one other interesting piece here, John, which is when we think about data in this context, we often only think of our own data, our first party data.
But augmenting your data with insights from other parties can be really helpful too. And for that we're seeing really rapid adoption of the AWS data exchange. You could think of this almost as an app store for your data where you can rapidly subscribe to data offerings and have that data stream right into your AWS environment for you to process and consume and merge with your own datasets.
One fascinating provider on the data exchange is an AWS travel and hospitality competency partner, Foursquare, which provides extensive points of interest data available on subscription for travel companies. Really useful when you're thinking about building out experiences around your property or destination. More broadly, and to take just one specific example, look at a company like Travelport, which is at the heart of modern retailing again, connecting travel sellers and travel suppliers together. This is a highly dynamic marketplace bound by vast amounts of ever-changing data and that's exactly why Travelport's committed to a long-term strategic relationship with AWS.
But I do feel kind of odd talking about data to you, John, given ATPCO. You're in the business of data. You are a data company and look at how you're using cloud for all of the reasons I've suggested.
Yeah, ATPCO as a data company has I think a lot to offer in a cloud environment. We are pursuing redoing the way in which we build and distribute our subscriptions, our data subscription products. We've partnered with you and an Amazon partner in order to reimagine what that might look like in the future.
We continue to enhance our direction associated with the data lake and what new data can we integrate and how do we use that as a platform to deliver business insights and to put intelligence and machine learning algorithms on top of that to force it to be more real-time and applicable at a specific point in time rather than looking at longer and longer time horizons. It is certainly getting a huge amount of focus at ATPCO, and certainly partnering with AWS to help us on that journey has been a big help.
What do you see as the biggest impediments for companies to take advantage of that data? For example, there are a few companies doing it really well, there's a ton of data out there, but I would say that in many cases people either don't know it's there or they don't have access to it, or they can't get it into a form in which they can use it with the systems that exist on the back end. What do you see as the major impediments and how do people, how do we begin to break through so that we have better access to that data and it's easier to integrate and take advantage of it?
Yeah, I think, really simply, it goes back to that idea of speed I was talking about, John. Getting started. I think in the way technology systems used to be with monolithic applications and systems you needed to organize your data first before you started to try to analyze it and make it useful. You don't really have to go through that process anymore with cloud. You can start to put the data you have, available in the formats it's available today, into the cloud and then let the smarts of the systems start to make use of that data to analyze that data and start to take advantage of services like machine learning to draw inside.
So I guess my view really is that there should be nothing holding you back from getting started, and actually I think you'd be surprised by the utility you could gain by making those first early steps.
What do you feel like is the ultimate opportunity for the travel industry in the cloud? Is it data or is it something else?
You know, we spoke earlier about many of the travel companies that are already moving to the cloud, so as I think about that, it really brings me back to five really fundamental core benefits of cloud, and ultimately why I think we're seeing so many travel companies move so quickly to cloud and AWS right now. The first is agility. AWS enables customers to quickly spin up the resources as they need them, deploying hundreds or thousands of servers in minutes. This means customers can very quickly develop and roll out new applications. It means teams can experiment and innovate more quickly and frequently, and ultimately if an experiment fails, you can always just de-provision those resources with really minimal risk and cost incurred.
Which leads me to that second reason, which is cost savings. If you look at how people end up moving to the cloud, almost always the conversation starter begins with cost. Customers have the opportunity to trade their capital expenses for variable expenses and only pay for IT as they consume it. And that those first two really lead to this third reason, which is elasticity. So again customers used to over-provision their technology to ensure they had enough capacity to handle business operations at peak levels of activity. But now they can just provision the amount of resources they actually need knowing that they can instantly scale up or down as the business demands, which also again reduces cost.
All of this leads to the ability for companies and customers to innovate much faster because they can focus their really highly valuable IT resources, and probably scarce resources, on developing the applications and services that are really going to differentiate the brand or the business on behalf of their customers instead of some of the undifferentiated heavy lifting of managing infrastructure or data centers.
And then finally, it's that AWS and cloud will enable companies to really deploy globally in minutes. AWS is global infrastructure of 81 availability zones, 25 geographic regions. Got another 21 availability zones announced in seven more regions, adding in Australia and Indonesia, coming to India, coming to Indonesia, Israel, Spain, Switzerland, the United Arab Emirates. It's really compelling.
Yeah, we've certainly seen the cost and time for innovation come way down at ATPCO as we've embraced the cloud. And innovating in the data center from a technology space can be a very expensive thing to do. You typically have to acquire equipment, you have to acquire software, you have to get partners to work with you. It's difficult to get people up to speed on the technology because there's not a lot of training, or you have to invest in it and these cycles get very long and we find that that people get invested in them even if they're not the right technology. So the cloud really speeds that up because you don't have to go through that procurement phase. You can try things, they tend to be well documented, there's a community around them to experiment with, and the cost of throwing them away when they don't pan out is almost nothing. So, we really see that quite a bit at ATPCO as well.
What do you see as the impediments for this big opportunity? What's keeping people from realizing all of those benefits?
Yeah, John, I've seen this tension between the opportunity to innovate, so meeting the evolving expectations of travelers and guests and keeping up with the other ever-expanded docket of priorities, some of which we've already spoken about, you know, the evolving health and safety regimes contactless service, and the like. And then the management of the underlying systems on which all those innovations run, changing the engine, switching from on-premise to cloud. It delivers so many benefits for organizations, but it may not have the same perceived immediate wow factor as prioritizing new services or capabilities for an organization.
Personally I think that's a bit of a false economy, and if you look back at some of the innovations we spoke about earlier, such as Star Alliance's focus on passenger transfer experiences, something that's being built and delivered in a rapidly short period of time because organizations like Star Alliance were already on AWS and could move much more quickly.
So I think that the sort of nimble and agile approach that comes from being on cloud really does change the game and I think that's something to take note of.
Is there something you think that we should be doing now as an industry that we're not doing? Not two or three years from now, but today that we're not doing as an industry that we should?
I mean, too often...
That's the easy answer, David.
...but it's aligned with what I was saying, right, which is too often organizations wait to have all their ducks in a row, as we like to say. They wait to have everything perfectly lined up before they get started. But I don't think our industry’s customers, the travelers and guests, are waiting for the brands or providers to get going. So it's okay I think to be more agile to experiment and to learn as you go.
Our founder at Amazon, Jeff Bezos, said you know if you double the number of experiments you do per year you're going to double your inventiveness. So I think that that speaks for this idea of just get going and take action today.
And within Amazon we've actually tried to, sort of the way I’d like to think of it as, we've coined this phrase “operationalizing innovation” so that everyone in the company can contribute towards our inventiveness. And I can call out just a couple of approaches we use, in particular the first, being we talk about whether a decision that we're looking to make is a one-way or a two-way door. Many if not most of the decisions that actually many of us make could really be classed as a two-way door. We're not making big investments, the risk profile's low. If something doesn't work out, we can just dial back, or as we'd like to say, walk back through that two-way door. And so we really encourage our teams to have a bias for action where they can make two-way door decisions.
And the second idea I’d share is that we encourage the use of press releases to document and align our internal thinking before we've actually committed resources to a project. Perhaps peculiarly, we write these documents at the beginning rather than at the end of the ideation and innovation effort, and that's because they're a really great vehicle to organize our collective thoughts and align diverse teams and different parts of the organization. And they can help them accelerate the pace and scale of innovation, too.
Now, I’m not suggesting that companies should or could just adopt what works well for us. It works for Amazon, it may not necessarily work for others, but again going back to that summary of just get started, I do think that getting going, making a start and not what works well for your organization, there's really so little holding folks back. And I mentioned Andy Jassy's eight keys to reinvention earlier and called out speed as one of those. And so, yes, I stay with my initial response to your question, John. I think get started is right.
Okay, finally then, let's look out then. What's coming? What do you see down the road when you get out the crystal ball or your future telescope? What do you see down the road that's going to be really innovative and perhaps even game-changing for the industry?
You know, at Amazon we love that customers are divinely discontent. Their expectations are never static, they go up. It's human nature, and because of that we cannot rest on our laurels and obviously what works today might not resonate tomorrow. Today's innovation is really going to be taken for granted by passengers and guests tomorrow. So the way I think of this, John, is that digital transformation is a journey, It's not a destination. And for sure as we look ahead, many of the discussions we have with travel and hospitality leaders are going to continue to center on enhancing the guest and traveler experience, on driving operational efficiency and resilience, and sustainability, which perhaps has been a little bit on hold over the past 18 months or so, but I’m hearing that back at the front of the agenda again today.
And it's going to be all of these capabilities are going to be enabled through technology, through the use of data and analytics, machine learning and artificial intelligence, and the internet of things. You mentioned though the crystal ball, John, and seriously if there's one really humbling lesson from this pandemic, it's pretty hard to predict the future.
And if there's something we do know though, it's that companies who are agile and those that innovate on behalf of their customers I think are going to be really well prepared to build what's next for travel and hospitality, and I certainly can't wait to see all the innovation yet to come.
Thank you very much. I’m very glad that you're able to join us for Elevate and I enjoyed our conversation.
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